Having enforceable security over all of a borrower’s assets is obviously of primary importance to a lender. However, where a borrower occupies leased premises, ensuring the lender has quick and reliable access to the collateral is equally important, especially if the landlord proves to be unco-operative after a borrower’s default. Although court-ordered access to a borrower’s leased premises can be sought after a borrower’s loan default, a landlord waiver obtained prior to an initial advance of a loan can bring some added certainty to the realization process outside of a bankrup
Generally speaking, the policy of the Bankruptcy and Insolvency Act (“BIA”) is not to interfere with secured creditors, leaving them free to realize upon their security. While this makes sense in the abstract, the question that is most often posed by secured creditors is “what does this mean in a practical sense? What exactly do I need to do to retrieve my secured asset?”
On August 18, 2011, Mr. Justice Morawetz, of the Ontario Superior Court of Justice, released an important decision in regard to preference actions in the matter of Tucker v. Aero Inventory (UK) Limited (together with Aero Inventory plc, Aero).
Background
Action for return of premiums paid of key man insurance policies dismissed.
[2011] O.J. No. 3387
Ontario Superior Court of Justice
M.A. Penny J.
January 21, 2011
The appellant insurer sought leave to appeal the order of the Chambers Judge who dismissed it’s application to be added as a party or intervener in an underlying liability action in the Supreme Court of British Columbia.
[2011] B.C.J. No. 1336
2011 BCCA 326
British Columbia Court of Appeal (In Bankruptcy and Insolvency)
P.A. Kirkpatrick J.A. (In Chambers)
July 8, 2011
Unremitted source deductions are subject to a deemed trust in favour of the Crown under Section 227 of the Income Tax Act (the “ITA”), Section 86 of theEmployment Insurance Act (the “EIA”) and Section 23 of the Canada Pension Plan (the “CPP”). Subsection 227(4) of the ITA creates the trust for income tax deductions and Subsection 227(4.1) creates a super-priority lien in favour of the Crown, in the amount of the trust, over all the debtor’s assets.
When a company winds up, begins restructuring proceedings or goes bankrupt, a debtor or creditor may be able to cancel out the amount payable to the other party by using the remedy of “set‐off”. Set‐off involves the cancelling of crossliabilities between two parties who owe each other money. It is a valuable tool that can increase a creditor’s percentage of recovery and decrease the debt burden of a debtor.
Types of Set‐off: Contractual, Legal or Equitable
The Supreme Court of Canada decision in Century Services Inc. v. Canada (Attorney General), which arose from the restructuring proceedings of Ted LeRoy Trucking Ltd. and was released on December 6, 2010, is a landmark decision in Canadian insolvency law.
A recent Alberta appellate decision establishes that a trustee in bankruptcy may sell a franchise agreement to a third party, in spite of objections by the franchisor, under the Bankruptcy and Insolvency Act (BIA). The Alberta Court of Appeal’s decision in Ford Motor Company of Canada Ltd v Welcome Ford Sales Ltd contains three important messages for franchisors:
During the past 14 months, courts in Ontario have rendered three decisions dealing with the application of limitation periods to claims for fraudulent conveyances or preferences. A “limitation period” is a period of time, specified in a statute, within which a plaintiff must commence a court proceeding to seek a remedy. Otherwise, the claim is said to be “statute-barred” and an action to enforce the claim will be dismissed.
The recent decisions have brought some clarity to the law in this area, but have left other questions unanswered.
Background